In the aftermath of President Bill Clinton's signing of legislation mandating more equitable coverage of mental illness starting in January 1998, supporters of nondiscriminatory coverage hailed it as a historic first step toward parity.

The provision conditionally equalizes annual and lifetime aggregate limits for treatment of mental illness and physical illness in group health plans. It was included in a Veterans Affairs-Housing and Urban Development spending bill signed by the President on September 26 in the Rose Garden.

Speaking at a Capitol Hill luncheon recognizing Mental Illness Awareness Week earlier this month, APA President Harold Eist, M.D., said the measure "gets the camel's nose under the tent."

At the September 26 signing ceremony, President Clinton was joined by parity supporters including Senators Pete Domenici (R-N.Mex.) and Paul Wellstone (D-Minn.), who fought to get the measure through Congress. Tipper Gore, wife of Vice President Al Gore and a champion of nondiscriminatory coverage for mental illness, also spoke at the signing.

In his remarks, Clinton commented that there should be "no more double standards; it's time that law and insurance practices caught up with science."

He added, "I am convinced that the more we deal with this issue, the more we will come to see all kinds of medical problems as part of a seamless web, not easily divisible into mental and physical categories. The more we learn, the more we will know that.

"Today we try to bring our institutional response to those challenges up to what we now know and what we also know is morally right. I want to thank Tipper Gore for her passionate, persistent, unrelenting advocacy of this position to the President and others. When I walked up here_you know there's always a marked contrast when you see someone happy and you see someone sad. I know no one in whom the contrast is more marked. I would do anything to see Tipper Gore as happy as she was today. She has fought for all of you who believe in this position.

"I would also like to say a very personal word of thanks for the quiet and courageous dignity with which Senator Domenici and Senator Wellstone have brought to bear their own life's experience on this great endeavor. They have made a profound impact on me and on their colleagues and on our country at some considerable effort to themselves, and I thank them very much for it. Thank you."

According to an analysis in the October 2 issue of the Bureau of National Affairs' Managed Care Reporter, the new law may contribute to the growth of managed care through cost pressure on firms that now provide coverage through traditional indemnity (fee-for-service) plans. Many indemnity plans have adopted restrictive annual and lifetime caps, according to Ronald Bachman of Coopers and Lybrand, who wrote an actuarial analysis of the new parity legislation for the American Psychological Association. Managed care plans, however, typically control costs by limiting the number of annual outpatient visits and inpatient days, which is still permitted under the new legislation.

The Coopers and Lybrand analysis suggests that the new legislation might increase costs for indemnity plans by about 0.3 percent, a figure consistent with an estimate from the Congressional Budget Office (CBO) of 0.4 percent. According to CBO, employers will experience only a 0.16 percent increase in their costs by complying with the new mandate.

Starting January 1998, the new law will require group health plans in businesses that have 51 or more employees and offer any mental illness coverage to have equal annual and aggregate lifetime limits for coverage of mental illness and physical illness. But this provision falls well short of a comprehensive mandate, according to APA's Division of Government Relations.

Small businesses of 50 or fewer employees are exempted, as they were in the Kassebaum-Kennedy health reform measure signed into law this summer.

The law applies to group health plans, including self-insured plans, which typically involve large companies that self-insure under provisions of the Employee Retirement Income Security Act (ERISA). This is significant in that it marks the first successful federal mandate of a benefit that preempts ERISA. At the same time, the law does not preempt state laws that mandate mental illness coverage stronger than that in the new federal law.

The new law does not, however, require employers or health plans to provide coverage for treatment of mental illness. Parity advocates are concerned that it may motivate some employers to drop limited mental health benefits altogether to escape the federal mandate.

But others believe that the pressures of the marketplace, particularly in a strong economy, will induce employers to cover treatment of mental illness.

The new law expressly excludes coverage for treatment of substance abuse or chemical dependency, although it is not clear whether psychiatric illness related to substance abuse would be covered.

The new law does not require parity with respect to copays, day or visit limits, or managed care measures such as carveouts. In carveouts, the mental health benefit is managed by a separate entity than are other health benefits.

The new law does not apply to the individual health insurance market, meaning that mom-and-pop businesses may still find it difficult to purchase an affordable health plan with adequate coverage for treatment of mental illness.

Business is protected from having to pay for potentially costly treatment through a provision that permits any health plan that experiences a cost increase of 1 percent or more as a consequence of providing coverage for mental illness treatment to opt out.

(Psychiatric News, October 18, 1996)